Commissioner Of Incometaxchennai v. Shri.shivlal87, Mint Street,Chennai - 600 079

In the High Court of Judicature at Madras Dated: 22.09.2014 Coram The Honourable Mr.JUSTICE R.SUDHAKARandThe Honourable Mr.JUSTICE G.M.AKBAR ALI Tax Case (Appeal) Nos.362 to 369 of 2014& connected M.P.Nos. T.C.(A)No.362 of 2014: Commissioner of IncometaxChennai.... Appellant in all TCA vs. 1.Shri.Shivlal87, Mint Street,Chennai - 600 079..... Respondent in TCA.362 & 363/14 2.Shri.Jarmalal66,Mull Sahib St.,Chennai-79. .... Respondent in TCA.364 & 365/143.Shri Chandra Bai,66.Mull Sahib St.,Chennai-79..... Respondent in TCA.366 & 367/144.Shri Sadana Bai87, Mint St.,Chennai-79..... Respondent in TCA.368 & 369/14 APPEALs under Section 260 A of the Income Tax Act against theorder dated 11.10.2012 made in I.T.A.Nos.682,683,660 and 659/Mds/2012and C.O.Nos.80,82,81 and 83/Mds/2012 on the file of the Income TaxAppellate Tribunal, Madras "C" Bench, Chennai for the Assessment year2004-2005 and Appeal against the order of the Commissioner of IncomeTax (A)-IV 121 MG Road, Chennai-34, in I.A.No.96/10-11, 174/08-09 &599/06-07/A-IV, dt.15/12/2011 & ITA.173/08-09/A-IV dt.13.12.11respectively & Appeal against the order of the Income Tax OfficerBusiness Ward-XII(3), Chennai-6 in PAN/GIR No. ,dt.29.12.06, 18/12/08, , , 31.12.2010. For Appellant : Mr.J.Narayanasamy Standing counsel for Income Tax C O M M O N J U D G M E N T (Delivered by R.SUDHAKAR,J.) The above Tax Case (Appeals) are filed by the Revenue as againstthe common order of the Income Tax Appellate Tribunal in eightappeals - four by the assessee and four by the Revenue, for theassessment year 2004-05. 2. The brief facts are as follows:The assessees Shri.Jhumarlal, Smt.Chandra Bai, Shri.Shivlal andSmt.Sadhana Bai had together purchased a property during thefinancial year 1999-2000 for a total consideration of Rs.58,49,320/-.The share of each of the assessee in the said consideration wasRs.14,62,330/-. The building in the said property was demolished anda new house was constructed in the land during April, 2001 to March,2004. During the course of regular assessment of Shri.Shivlal, theAssessing Officer called upon him to submit the details of cost ofconstruction of the building, namely, Door No.87, Mint Street,Chennai - 79. The valuation made by the registered valuer wasfurnished by the assessee and in the valuation report, the value ofthe building was shown as Rs.74.85 lakhs. The details ofconstruction expenses filed by all the assessees gave the figure ofRs.1,28,92,674/-, which includes the value of the land and incidentalexpenses. After excluding the value of the land, the cost ofconstruction admitted by the assessee, as worked out by the AssessingOfficer, came to Rs.72,21,622/- against the value of Rs.74.85 lakhsby the registered valuer. The assessee, Shri.Shivlal was examined,who had stated that no books were maintained for the constructionwork. 3. The Assessing Officer made a reference to the DepartmentalValuation Officer (DVO) under Section 142A of the Income Tax Act.The Departmental Valuation Officer fixed the cost of construction atRs.1,74,20,000/-. Since the property was owned by four assessees,the cost of construction was worked out at Rs.43,55,000/- perassessee. However, as per the assessees, the cost of construction inrespect of each of the assessee would amount to Rs.17,70,041,totalling to Rs.72,21,625/-. The difference amount was considered asunexplained investment by the individual assessees under Section 69Bof the Income Tax Act. The assessment in respect of Shri.Shivlal wascompleted under Section 143(3) of the Income Tax Act and in respectof other assessees, proceedings under Section 147 of the Income TaxAct was initiated and additions towards alleged unexplainedinvestment were done in the reassessment. 4. Aggrieved by such addition towards unexplained investment,the assessees preferred appeal before the Commissioner of Income Tax(Appeals), who reduced the addition in respect of each of theassessee to a lesser amount and spread this addition to various assessment years, namely, 2003-04 and 2004-05. Not satisfied withthe order of the Commissioner of Income Tax (Appeals), both theassessees as well as the Revenue preferred appeals before the IncomeTax Appellate Tribunal. 5. The Tribunal after considering the rival contentions of bothsides was of the view that in determining the cost of construction,which is the main plank of the assessees' case, the issue was whetherthe cost of construction should be based on CPWD rates or the ratesprescribed by the State Public Works Department. The Tribunalaccepting the contention of the assessee remanded the matter to theAssessing Officer for re-consideration of this issue as to how thecost of construction should be determined. The Tribunal in paragraph14 of the order observed as follows: "We are, therefore, of the opinion that fordetermining the cost of construction, the matter requiresa re-visit by the Assessing Officer. He has to givecogent reason for arriving at the cost of constructionwhether based on CPWD rates or State PWD rates, inaccordance with law, and also give reason why the books,in whatever form maintained by the assessee, could not beconsidered. 6. In so far as the Department's appeals challenging thereduction of addition and spreading over of addition to variousassessment years by the Commissioner of Income Tax (Appeals), theTribunal did not accept the argument of the Revenue and remanded thematter to the Assessing Officer. 7. Aggrieved by the order of the Tribunal, the Revenue is beforethis Court. 8. Learned counsel appearing for the Revenue vehementlycontended that the Commissioner of Income Tax (Appeals) has no powerto spread over the addition to various assessment years and hence,the Tribunal is not justified in remitting the matter to theAssessing Officer. 9. Heard learned Standing Counsel appearing for the Revenue andperused the materials placed before this Court. 10. The only aspect that needs to be considered is whether theCommissioner of Income Tax (Appeals) was justified in spreading overthe additions to various assessment years. We find that the Tribunalhas considered the issue in paragraph Nos.15 and 16 of the order,which reads as follows: "15. Coming to the second aspect raised by the Revenuein their appeals that CIT (Appeals) did not have any powerfor giving direction for another year, Hon'ble Apex Court in https://hcservices.ecourts.gov.in/hcservices/ 9. Heard learned Standing Counsel appearing for the Revenue andperused the materials placed before this Court. 10. The only aspect that needs to be considered is whether theCommissioner of Income Tax (Appeals) was justified in spreading overthe additions to various assessment years. We find that the Tribunalhas considered the issue in paragraph Nos.15 and 16 of the order,which reads as follows: "15. Coming to the second aspect raised by the Revenuein their appeals that CIT (Appeals) did not have any powerfor giving direction for another year, Hon'ble Apex Court in https://hcservices.ecourts.gov.in/hcservices/ the case of Rajinder Nath (Supra), has clearly held at para7 of its judgment as under:-"7. The expressions "finding" and"direction" are limited in meaning. A findinggiven in an appeal revision or reference arisingout of an assessment must be a finding necessaryfor the disposal of the particular case, that isto say, in respect of the particular case assesseeand in relation to the particular assessment year.To be a necessary finding, it must be directlyinvolved in the disposal of the case. It ispossible in certain cases that in order to rendera finding in respect of A, a finding in respect ofB may be called for. For instance, where thefacts show that the income can be belong either toA or B and no one else, a finding that it belongsto B or does not belong to B would bedeterminative of the issue whether it can be taxedas A's income. A finding respecting B isintimately involved as a step in the process ofreaching the ultimate finding respecting A. If,however, the finding as to A's liability can bedirectly arrived at without necessitating afinding in respect of B, then a finding made inrespect of B is an incidental finding only. It isnot a finding necessary for the disposal of thecase pertaining to A. The same principles seem toapply when the question is whether the incomeunder enquiry is taxable in the assessment yearunder consideration or any other assessment year.As regards the expression "direction" in s.153(3)(ii) of the Act, it is now well settled that itmust be an express direction necessary for thedisposal of the case before the authority orCourt. It must also be a direction which theauthority or Court is empowered to give whiledeciding the case before it. The expressions"finding" and "direction" in s.153(3)(ii) of theAct must be accordingly confined. Sec.153(3)(ii)is not a provision enlarging the jurisdiction ofthe authority or Court. It is a provision whichmerely raises the bar of limitation for making anassessment order under s.143 or s.144 or s.147:ITO vs.Murlidhar Bhagwan Das (1964) 52 ITR 2335(SC): TC51R.2168 and N.K.T.Sivalingam Chettiar vs.CIT (1967) 66 ITR 586 (SC) : TC51R.2041. Thequestion formulated by the Tribunal raises thepoint whether the AAC could convert the provisionsof s.147(1) into those of s.153(3)(ii) of the Act.In view of s.153(3)(ii) dealing with limitation merely, it is not easy to appreciate the relevanceor validity of the point." When assessee himself claims that the construction wasspread over to two to three years, in our opinion, thefinding of the CIT(Appeals) that addition, if any, made forunexplained cost of construction, has to spread over to suchyears, is nothing but a finding which is necessary fordisposal of the case. It is an issue directly involved inthe appeals before him and such directions, in our opinion,were not beyond the powers of CIT(Appeals). merely, it is not easy to appreciate the relevanceor validity of the point." When assessee himself claims that the construction wasspread over to two to three years, in our opinion, thefinding of the CIT(Appeals) that addition, if any, made forunexplained cost of construction, has to spread over to suchyears, is nothing but a finding which is necessary fordisposal of the case. It is an issue directly involved inthe appeals before him and such directions, in our opinion,were not beyond the powers of CIT(Appeals). 16. As for the decision of Hon'ble Apex Court in the caseof Foramer France (supra), relied on by learned A.R., thequestion there was applicability of Section 153(3)(ii) ofthe Act and whether observation of the Tribunal was adirection necessary for disposal of the appeal, relating tothe concerned petitioners. In our opinion, this judgment ofHon'ble Apex Court do not circumscribe the powers of CIT(Appeals) in any manner. In the decision of Banwarilal &Sons, Hon'ble Delhi High Court was seized of the issuewhether directions given by AAC in the said case, werenecessary for disposal of the appeal and whether suchdirection could be considered as one coming within the ambitof Section 153(3)(ii) of the Act. Here, the issue before usis not the question of any limitation or issue of notice.In the case of Sun Metal Factory (I) P. Ltd. (Supra),decided by co-ordinate Bench of this Tribunal, the CIT(Appeals) held that addition made by the Assessing Officerwas not based on any evidence found during search and, aftergiving such a finding, directed the Assessing Officer toreopen the assessment for given assessment years. Here,neither assessments were based on any search, nor can it besaid that CIT(Appeals) had enlarged the scope of appeals bygiving a direction to split the unexplained investment oncost of construction to the period of construction." 11. On going through the order of the Commissioner of IncomeTax (Appeals) and that of the Tribunal, we find that the issue as towhether the addition should be spread over to various assessmentyears in an admitted case of construction between 2001 and 2004 isacademic and we are not inclined to interfere with the order of theTribunal. 12. We find that the reasoning of the Tribunal relying on thedecision of the Apex Court is justified. Accordingly, we find noquestion of law much less substantial question of law that arises for our consideration in these appeals. Accordingly, all the above TaxCase (Appeals) are dismissed. No costs. Consequently, connectedMiscellaneous Petitions are closed. Sd/-Assistant Registrar(CS-IV)Dated: 3.11.2014//True Copy//Sub Assistant RegistrarTo1. The Income Tax Appellate Tribunal, Madras "C" Bench, Chennai.2. The Commissioner of Income Tax (Appeals)-IV, Chennai - 34.3. The Income Tax Officer, Business Ward - XII(3), Chennai - 06.4. The Commissioner of Income Tax, Chennai.+8 cc's to M/s.J.Narayanaswamy, Advocate, SR.45822 to 45829.js(co)krd 5/11T.C.(A) Nos.362 to 369 of 2014& connected M.P.Nos.